NetworkNewsWire Editorial Coverage: The marijuana market is ripe with investment opportunities, and the leaders of the pack are those who demonstrate the vision and ability to increase corporate value. Be it through revolutionary technology, health applications, packaging and accessories, cultivation tools or other means, companies like SinglePoint, Inc. (SING) (SING Profile), Kush Bottles, Inc. (KSHB), Insys Therapeutics, Inc. (INSY), Solis Tek, Inc. (SLTK) and Medical Marijuana, Inc. (MJNA) are capturing their share of a burgeoning market and presenting investors with unique and exciting opportunities to climb aboard.
In North America, the cannabis market was valued at approximately $7.2 billion in 2016, and it shows no sign of slowing down. Not only is the market’s CAGR forecast between 17 and 25 percent within the next few years, but a recent report from New Frontier Data further estimates that by the year 2020, U.S. medical marijuana sales alone will increase to $13.3 billion, while adult recreational marijuana sales will grow to approximately $11.2 billion (1).
Because marijuana is still illegal on a federal level (29 states and the District of Columbia have passed initiatives or laws legalizing or regulating the substance), some investors see the market as a risky bet. The gargantuan size and potential of this market cannot be ignored, however, and numerous companies are hedging against risks of violating federal law by offering a hands-off approach that serves marijuana businesses without ever touching the plant.
One such example is SinglePoint (SING) a provider of technology solutions to enable seamless business transactions that’s building an acquisition portfolio of undervalued subsidiaries with an emphasis in new technologies. When it comes to opportunities in the marijuana industry, SinglePoint is taking advantage of a couple avenues to maintain diversification and build corporate value.
SinglePoint’s cannabis vertical, SingleSeed has a competitive “head start” in providing mobile payment processing solutions, business tools and text message marketing to “unbankable” marijuana dispensaries whose operations are crimped because of the lack of banking in the industry. SinglePoint founder and CEO Greg Lambrecht further discusses this obstacle, the company’s revenue-generation strategy, and how SingleSeed.com could be a “pick-and-shovel” for the cannabis industry in a podcast interview here: http://nnw.fm/L9HdG
“The long-term vision is to build SingleSeed.com into a market-place for dispensaries to buy the products they need to do business. SingleSeed will also provide consulting services to cannabis businesses who need help gaining traction and success in their strategies,” Lambrecht explained in a recent shareholder update (http://nnw.fm/edXE2).
Another component of SinglePoint’s strategy in the cannabis space also centers on technology via its investment in Convectium, a profitable provider of equipment, branding and packaging solutions for the cannabis industry. Convectium is the developer of the first cartridge and vape pen oil filling machines made for wholesale distribution to marijuana dispensaries. Convectium’s 710Shark and 710Seal machines are capable of filling and packaging more than 100 cartridges or disposable vape pens in just 30 seconds – an automation that represents a significant advancement over the traditional, time-consuming and messy method of filling cartridges by hand. Currently, these machines are sold to dispensaries through the EquipCanna.com brand, and Convectium further operates a consumer brand that includes BlackoutX and HazeSticks, reaching customers in over 52 countries.
Diversification is a considerable aspect of SinglePoint’s strategy to build corporate value. Earlier this week SinglePoint signed a reseller agreement that enables the company to start onboarding “high risk” merchant accounts. Over 100 business types are considered high risk, including auctions, vape pen sales, gambling, online gaming and more. This approach serves as a doorway for SinglePoint to offer payment solutions to cannabis businesses, which are also considered high risk, when the industry becomes bankable.
“We are providing multiple solutions to the cannabis space and we are trying to do the same in the payments space as well. Being able to offer a payment solution to multiple different verticals gives the company a larger target market to tap into. We believe high risk is a huge opportunity and an underserved market at this point,” Lambrecht stated in the news release (http://nnw.fm/3iacI)
In addition to the need for marketing and automation, growing interest in cannabis/marijuana products is also driving demand for packaging and accessories. This is where Kush Bottles (KSHB) steps in – also taking advantage of a hands-off approach. Kush Bottles started out in 2010 as a provider of innovative packaging solutions for the marijuana industry, and the company has since expanded its product line to range from custom packaging and labeling items to point-of-sale products like grinders, lighters, papers and glass pieces. Serving thousands of dispensaries, retail shops, growers and consumers, Kush Bottles has become a premier packaging supply and services company, catering exclusively to the needs of the cannabis industry.
Kush recently acquired Los Angeles-based CMP Wellness, LLC, a privately held distributor of vaporizers, cartridges and accessories. According to the press release, this move is expected to diversify Kush’s product range and deliver new distribution channels and cross-selling opportunities for existing product lines. Like SinglePoint’s Lambrecht, Kush CEO Nicholas Kovacevich also acknowledged the need for financial options in the cannabis industry.
“The rapid growth of the cannabis market, coupled with the lack of access to traditional financial services, creates a unique opportunity for Kush Bottles. As a market leader, we are in a strong position to leverage our first-mover advantage to grow market share and scale our business through market consolidation. We have the necessary infrastructure to immediately support a larger customer base and benefit from operational synergies while maintaining Kush Bottles’ high production standards,” Kovacevich stated in the press release.
Another company serving the marijuana industry is Solis Tek (SLTK), a vertically integrated technology company that provides digital lighting equipment for hydroponic cannabis cultivation. The company’s digital lighting solutions are designed to help increase yield, lower costs and improve crop growth for cannabis growers. Solis Tek’s customers include retail stores, distributors and commercial growers both in and outside of the United States, and the business model is paying off. Solis Tek earlier this week reported record revenues for the quarter ended March 31, 2017, of $2.9 million compared to revenue of $2.5 million in the first quarter of 2016, representing a 12% year-over-year increase. The company attributes this growth to strength in the overall cannabis market, brand recognition and its ability to attract new clients. It also noted “a number of significant expansion projects from our existing customers.”
Another high demand aspect of the marijuana industry is medicinal purpose. Insys Therapeutics (INSY), a specialty pharmaceutical company, is successfully navigating the medical marijuana market—in a manner of speaking. The company’s innovative drugs are synthetic cannabinoids. In developing these pharmaceutical cannabinoids, Insys aims to address the clinical shortcomings of existing commercial products and to improve quality of life for patients with unmet medical needs. The company’s SUBSYS drug has been approved for managing breakthrough pain in cancer patients 18 years and older who are already receiving and have become tolerant to opioid therapy. It is delivered via Insys’ proprietary sublingual spray technology and is the first and only breakthrough pain medication for cancer patients to be offered as a sublingual spray. In 2016, the FDA also approved Syndros, the company’s dronabinol oral solution, for anorexia-associated weight loss in AIDS patients and for nausea and vomiting in chemotherapy patients. The Drug Enforcement Agency recently placed Syndros in Schedule II of the Controlled Substances Act.
It is clear that many of the standout leaders within the marijuana market are capitalizing on its performance in unique and innovative ways while promoting corporate growth. These “hands-off” companies demonstrate the diverse opportunities for the savvy investor looking to profit on the explosive potential of the blooming marijuana market, but there is also opportunity for a direct encounter.
Medical Marijuana (MJNA) is an innovative company that does handle the cannabis plant, but in a unique way. MJNA has identified a means of working within federal government restrictions on cannabis to legally provide high-quality cannabis-derived products in the United States. The key is non-psychoactive cannabinoids like cannabidiol (CBD), which has a wealth of potential health applications without reliance on tetrahydrocannabinol (THC). By growing low-THC varieties of cannabis—aka hemp—outside of the U.S., MJNA was able to create CBD hemp oil and successfully import it into the U.S. CBD hemp oil is a fully legal extract from carefully cultivated hemp plants and is non-psychoactive, contains a full spectrum of phytocannabinoids, is high in CBD, and contains almost no THC, which is why it can be legally sold in the U.S.
The company’s products, offered through the distribution divisions HempMeds and Kannaway, include pure CBD hemp oil extracts, tinctures, sprays, capsules, vaporizers, bath and body products, and even chewing gum. In addition to selling CBD hemp oil products to more than 200,000 consumers in the U.S., MJNA has additionally been able to offer the very first legal cannabis products in Brazil and Mexico.
(1) New Frontier Data: http://nnw.fm/2Gezn
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